Growth projections too optimistic

SHARE | Monday, 20 June 2016 | By Staff Writer

Economists from the Department of Economics at the University of Botswana (UB) argue that growth projections that have been anticipated by the budget speech presented by finance minister, Kenneth Matambo earlier this year were overly optimistic. The budget speech has foreseen the non-mining sector growing at 4.7 and 4.9 percent in 2016 and 2017 respectively. “With the expected growth of the mining sector weaker, the strength of recovery of the non-mining sector must be robust if the anticipated growth rates of the overall economy are to be realised,” UB economists said in the latest Stanbic Bank quarterly economic review. Matambo said in the budget speech that the growth of the non-mining sector would result in “the impact of domestic policy initiatives such as the Economic Stimulus Programme.” A group of economists, among them Obonye Galebotswe, say these growth projections rest on a weak foundation.

They contend that significant operations in some of the policy initiatives presented in the budget speech including ESP and Special Economic Zones (SEZ) programme are unlikely to occur during the coming year. “The infrastructural works for the water and electricity would take, at the very least, several months to be concluded.” Projects earmarked in the water sector are increasing water storage capacity and building primary pipelines in the greater Gaborone; constructing North-South Carrier parallel pipeline; and exploring the feasibility of drawing from Lesotho and Chobe-Zambezi. On the other hand, efforts to improve the energy supply include refurbishment of Morupule A power defects in Morupule B. Minister Kitso Mokaila – whose ministry’s portfolio include the energy sector – told a the gathering at a resource conference that as part of the improving power supply, plans are underway to turn the Morupule B power station into an Independent Power Producer which will support the country’s efforts to become a power exporter.

But Galebotswe and his colleagues at the UB say the timeline of the projects will result in continued shortage of water and electricity supplies will continue to undermine the economy. The second issue that would undermine growth according to economists is that of the P1.62 billion earmarked for ESP, over 80 percent is in construction. “Similarly for tourism, with ongoing global problems financial inflows into the sector are likely to be small,” they said, adding that with the Economic Diversification Drive (EDD) and Special Economic Zones (SEZ) theme, it is hard to imagine that by the end of the year there will be significant operations going on due to the difficulty in attracting foreign direct investment.